Update from April 20th below. This post was originally published on April 19th
BitcoinBTC BTC is just hours away from the next supply cut, known as the Bitcoin halving, amid fears of a “rapid, catastrophic” collapse of the US dollar.
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Bitcoin price, which has risen around 330% since falling to recent lows of $15,000 per bitcoin in late 2022, has struggled in recent weeks even as expectations have risen that China is about to to drive up the Bitcoin price.
Now, as Binance's Bitcoin wallet issues a “credible” iPhone hack warning, a closely watched analyst has predicted that the Bitcoin halving could catapult the Bitcoin price to nearly $1.8 million – giving Bitcoin a market cap of nearly $35 trillion, even if Wall Street banks issue serious Bitcoin price halving warnings.
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Bitcoin price has fallen ahead of the latest Bitcoin halving, although some believe that Bitcoin … [+]
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The Bitcoin halving – a supply cut that will cause the Bitcoin block reward to drop from 6.25 Bitcoin to 3.125 – is set to take place later today and will potentially have a devastating impact on the Bitcoin industry's economy, which has evolved since the last supply cut changed dramatically in 2020.
The halving, which reduces the daily supply of new Bitcoins from about 900 to 450, is just hours away, according to NiceHash countdown. The 2024 Bitcoin halving is the fourth Bitcoin halving after the previous halvings in 2012, 2016 and 2020.
“If we achieve a similar trajectory to the previous cycle and look at historical performance one year after the halvings, Bitcoin could reach $450,000 per year from now on, or $270,000 if this cycle is more like 2016,” said Noelle Acheson, Bitcoin analyst and author of the newsletter “Crypto is Macro Now,” wrote, citing Bloomberg data.
However, using Axios data, Acheson noted that Bitcoin price “could reach $350,000 (using the previous cycle as a benchmark) or $1.8 million (using 2016 cycle performance)” – which Bitcoin has a market capitalization of $35 trillion.
Update 4/20: At around 8:00 p.m. ET, Bitcoin successfully completed its fourth halving after the network issued its 840,000th block, the so-called block height, which was pre-programmed by mysterious Bitcoin creator Satoshi Nakamoto as to when the block reward would be halved . Bitcoin miners who secure the network with powerful computers will now receive 3.125 Bitcoin for each block mined, up from 6.25 Bitcoin just yesterday.
Bitcoin price remained stable leading up to the closely watched supply cut and in the hours after.
“If data from previous Bitcoin halving cycles can give us insight into the upcoming halving, then one could expect any potential impact to not become apparent until more than a year or possibly even 18 months after the event,” says Michael Anderson, co-founder of the crypto-focused Investors Framework Ventures said in emailed comments.
“To put it simply: While halvings typically attract significant media attention and also serve as a timely reminder of the importance of Bitcoin’s limited money supply, supply issuance reductions have historically not had an immediate impact on crypto markets.” However, this is the case “First crypto market cycle in which Bitcoin reached an all-time high before a halving, meaning old models are likely less reliable.”
The countdown has already begun for the next Bitcoin halving, which will once again reduce the number of new Bitcoins issued to miners, currently scheduled for early March 2028.
“In the short term, the upcoming halving will slightly imbalance supply and demand, which will increase market pressure as more investors look to get a piece of the pie,” Duncan Ash, head of strategy at Coincover, said in emailed comments .
“This is likely to continue until the increased price deters new investors, restoring a closer balance between the number of buyers and sellers and calming the market. In addition, the industry will emerge with more users, a higher market capitalization and more.” Therefore, a stabilizing effect on the market can be expected in the medium to long term.
This Bitcoin halving is the first to take place outside of the Federal Reserve's ZIRP (zero interest rate policy), the first after the debut of a fleet of long-awaited Bitcoin exchange-traded funds (ETFs) on Wall Street, and the first since China has reported the country's Bitcoin miners in 2021.
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Bitcoin price has risen rapidly over the past year and has previously overcome the price crash of 2022 … [+]
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“We are currently in a high inflation, high interest rate environment,” Jeff Hancock, chief executive of crypto app Coinpass, said in emailed comments. “The Bitcoin market has evolved from a hobby for crypto enthusiasts to a real asset with institutional interest, which is why I think this cycle will be different,” Hancock said, pointing to the fleet of spot Bitcoin ETFs on the Wall Street. “Institutional demand for Bitcoin will continue.”
Bitcoin halvings will continue approximately every four years until around the year 2140. Once the Bitcoin network stops producing new Bitcoins, miners will only earn from transaction fees – something they are already preparing for with protocols like Ordinal, Runes and BRC-20 that have driven up transaction fees.
After weeks of speculation, including GS analysts at JPMorgan and Goldman SachsGS warning this week that Bitcoin price could fall immediately after the halving, there is still little consensus on what the supply cut will mean for Bitcoin price .
Historically, Bitcoin price has risen in the months following the three previous Bitcoin halvings. Andrew O'Neill, crypto analyst at S&P Global, told Reuters he was “somewhat skeptical about the lessons that can be learned from previous halvings in terms of price prediction.”
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